Feb. 24 (Bloomberg) -- Italians voted for the first time
since Europe’s financial crisis ushered in unelected leaders who
imposed an austerity regime to stem the turmoil.

Turnout fell today from the 2008 election, with the initial
estimates of the result due tomorrow shortly after 3 p.m. in
Rome, when the second day of balloting ends.

The populist campaigns of Beppe Grillo, once a television
comic, and former three-time Prime Minister Silvio Berlusconi,
who is fighting a tax-fraud conviction, have focused on
overturning the tax increases enacted by incumbent Mario Monti.
Front-runner Pier Luigi Bersani of the Democratic Party and
Monti have vowed to maintain budget rigor.

Bersani probably will gain a majority in the 630-seat lower
house, the Chamber of Deputies, according to polls published
Feb. 8, before a moratorium on surveys started. Victories by
Grillo, 64, or Berlusconi, 76, in swing regions such as Lombardy
and Sicily may prevent anyone from controlling the Senate,
producing gridlock or even new elections.

“If Berlusconi wins, the markets will be quite concerned,
but if he doesn’t, if there’s a hung parliament, that’s probably
about what’s expected,” Alexander Friedman, global chief
investment officer of UBS AG, said Feb. 22 on Bloomberg
Television’s “On the Move” with Francine Lacqua. “It still
won’t be nearly as scary as it was a year ago.”

Monti’s Backers

Monti, 69, was appointed by President Giorgio Napolitano in
November 2011 with Italy’s 10-year borrowing costs near 7.5
percent, doubts whether the world’s third-biggest debtor could
stay in the euro and Berlusconi the butt of jokes among his
European counterparts. The yield is now 4.45 percent -- its
average between the introduction of the euro and the collapse of
Lehman Brothers Holdings Inc. -- and has barely budged during
the two-month campaign.

With the backing of 80 percent of lawmakers, including
Bersani’s party and Berlusconi’s allies, Monti implemented the
austerity demanded by markets and European policy makers led by
German Chancellor Angela Merkel. He pushed through 20 billion
euros ($26 billion) of measures, including a tax on primary
residences, and raised the retirement age. Monti says he fell
short in deregulating the labor market to encourage hiring.

“There were forces on both sides of the spectrum against
this strategy, especially the Left,” Monti said on Feb. 21.

‘Recession Spiral’

Monti remains under attack from Grillo and Berlusconi,
their criticism stoked by Italy’s prolonged economic slump.
Berlusconi, appearing at a news conference yesterday at the
training facility of his AC Milan soccer club, blamed austerity
policies for triggering “a recession spiral,” according to the
Italian news agency Ansa. The Corriere della Sera and la
Repubblica newspapers said Berlusconi’s appearance violated the
customary 24-hour “silence” period before the election.

Turnout at 7 p.m. for the Chamber vote was 46.7 percent,
down from 49.2 percent at the same time five years ago,
according to the Interior Ministry.

Three protesters from the feminist group Femen protested
topless at the Milan polling station where Berlusconi was
voting. The demonstrators had “Basta Berlusconi” written
across their bodies and shouted the same. Police wrestles the
screaming women to the ground before carrying them off,
television images showed.

Italy is in its fourth recession since 2001. Its gross
domestic product will fall 1 percent this year after a 2.2
percent decline in 2012, the European Commission forecast Feb.
22. Unemployment will reach 12 percent in 2014 after rising to
11.6 percent this year, the commission said.

Sagging Competitiveness

Turning campaign promises into policy may be stymied by
Italy’s ranking as the 42nd most competitive economy in the
world, between Poland and Turkey, according to the World
Economic Forum. Among the 17 euro countries, it ranks 11th.

Grillo, who embraces the term populist, told crowds at his
two-a-day rallies that Italy must give monthly stipends of 900
euros to the unemployed and cut the work week to 20 hours.
Italy’s debt should be renegotiated, and all lawmakers must be
swept out, he said. Grillo, who isn’t running himself due to a
manslaughter conviction in the 1980s, chose the candidates of
his 5 Star Movement in what he called an online primary.

Grillo is “an anti-establishment vote,” said Giuseppe
Ragusa, assistant professor of economics at Luiss University in
Rome. “People are tired of high taxes, high corruption, of
politicians not being able to fix the many problems that Italy
has.”

Berlusconi Guarantee

Taxpayers got a guarantee from Berlusconi, who advocates
tax cuts, rebates and amnesties. The media magnate said in his
closing campaign appearance Feb. 22 he would pay 4 billion euros
out of his own pocket to refund the property tax known as IMU.

“I’ll take 4 billion euros of my fortune and I’ll give it
to Italians,” Berlusconi said, citing a campaign mailer he
sent. “My signature means that with that letter, anyone who
paid the IMU can go to the judge and ask me to return the money
if as prime minister I haven’t done what I promised to do.”

Bersani, 61, has proposed raising taxes on the wealthy to
finance breaks for lower-income families, while citing the need
to maintain the rigor applied by Monti to meet European Union
targets.

Bersani had 33.8 percent support in an SWG Institute poll
published Feb. 8, down 1.1 percentage points from Jan. 9.
Berlusconi gained 2.5 percentage points to 27.8 percent over the
same period, while Grillo rose 2.9 points to 18.8 percent.
Monti, running fourth, slipped 0.4 points to 13.4 percent,
according to SWG.

“I love the kids of the 5 Star Movement,” Bersani told
state broadcaster RAI’s interviewers Feb. 22. “I don’t have a
problem with the people who go into the streets with Grillo. I
can understand them. I have a problem with Grillo.”